Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 25-year annuity is $1 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of the current year.
Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 25-year annuity is $1 million and the annuity earns a guaranteed annual return of 12 percent. The payments are to begin at the end of six years.
What is the amount of the annuity purchase required if you wish to receive a fixed payment of $300,000 for 25 years? Assume that the annuity will earn 12 percent per year.